29Correspondent banking relationships

(1)A financial institution (the correspondent) that has, or proposes to have, a correspondent banking relationship with a respondent financial institution (the respondent) must, according to the level of risk involved, conduct enhanced customer due diligence as set out in subsection (2) in relation to correspondent accounts that are used, or are proposed to be used, for payments to, or receipts from, foreign financial institutions.

(2)The correspondent must—

(a)gather enough information about the respondent to understand fully the nature of the respondent’s business; and

(b)determine from publicly available information the reputation of the respondent and whether and to what extent the respondent is supervised for AML/CFT purposes, including whether the respondent has been subject to a money laundering or financing of terrorism investigation or regulatory action; and

(c)assess the respondent’s anti-money laundering and countering financing of terrorism controls to ascertain that those controls are adequate and effective; and

(d)have approval from its senior management before establishing a new correspondent banking relationship; and

(e)document the respective AML/CFT responsibilities of the correspondent and the respondent; and

(f)be satisfied that, in respect of those of the respondent’s customers who have direct access to accounts of the correspondent, the respondent―

(i)has verified the identity of, and conducts ongoing monitoring in respect of, those customers; and

(ii)is able to provide to the correspondent, on request, the documents, data, or information obtained when conducting the relevant customer due diligence and ongoing customer due diligence; and

(g)meet any other requirements prescribed by regulations and that apply to correspondent banking relationships.

(3)For the purposes of this Act, a correspondent banking relationship means a relationship that involves the provision of banking services by a financial institution (the correspondent) to another financial institution (the respondent) if—

(a)the correspondent carries on an activity or business at or through a permanent establishment of the correspondent in a particular country; and

(b)the respondent carries on an activity or business at or through a permanent establishment of the respondent in another country; and

(c)the correspondent banking relationship relates, in whole or in part, to those permanent establishments; and